Wednesday, November 29, 2017
MANAGING DIRECTOR: Scott Carrithers   PORTFOLIO SALES AND SERVICE: Steve Panknin • George Morris • Jeff Goble • Chris Thompson • Sean Doherty Robert Brickson • Kevin Doyle • Lonnie Harris •  Mark Tranckino • Robert Schuyler  Tom Toburen • Josh Kiefer • Nicole Burczyk • Kelley Frye • Natalie Regan • Aaron Stoffer • Chuck Honeywell

US Treasury Market
Date	1 mo	3 mo	6 mo	1 yr	2 yr	3 yr	5 yr	7 yr	10 yr	20 yr	30 yr
11/21/17	1.15	1.30	1.45	1.62	1.77	1.88	2.11	2.27	2.36	2.58	2.76
11/22/17	1.16	1.29	1.45	1.61	1.74	1.84	2.05	2.22	2.32	2.57	2.75
11/24/17	1.14	1.29	1.45	1.61	1.75	1.85	2.07	2.23	2.34	2.58	2.76
11/27/17	1.15	1.27	1.41	1.62	1.74	1.84	2.06	2.21	2.32	2.57	2.76
11/28/17	1.16	1.30	1.46	1.61	1.75	1.85	2.07	2.24	2.34	2.58	2.77

                                                                                                                                         Source: U.S. Department of the Treasury, as of 11/28/17  

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                                                             Seamless Transition?

   Federal Reserve Chair nominee Jerome Powell testified before the Senate yesterday and his comments were well received, at least in the short run, as the Dow Jones Average closed up over 255 points. Powell testified that the case for a highly anticipated December rate hike is “coming together” (the futures market current has the probability of an increase at the December meeting at 96 percent).

   Powell signaled broad support for how the Fed operates, regulates and guides the economy. He seemed to align himself with a more dovish wing of the U.S. central bank that believes the labor market can get even stronger without creating inflation worries. His comments suggest he shares current Fed Chair Janet Yellen’s view that there are still pools of potential workers who can be drawn into the labor force.

    Also exciting the equity market yesterday was perceived progress on tax reform. The Senate Budget Committee, by a 12-11 party-line vote, sent a tax-cut bill to the full Senate for a marathon debate this week. We will update this situation tomorrow.

  The uptick in rates associated with the Fed increases, (two earlier this year and one being built in for next month) has presented some interesting opportunities in DISCOUNTED callable securities. One example is below. It is a FHLB bond which was issued in March of 2016 as a 6 year bond with a first call in two years. It is now due 3-9-2022 with a first call 3-9-2018. It’s selling at a 98.70 discounted price to yield 2.14% to maturity and an attractive 6.60% yield to its first call. We currently own and offer 1.7 million.

Source:  Bloomberg 11/29/17

This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.

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